what will drop u.s. equities?

[grapejelly]

Re: what will drop u.s. equities?

Call me paranoid, but I don't believe commodities is the silver bullet. If the boomer bust will really happen, the global bust will pull any commodities under.

relative to what? Depreciating currencies. And that is what we are talking about...things and paper relative to currencies. I contend currencies will continue to be emitted in quantity greater than real economic growth, and commodities will rise.

[spunky]

Re: what will drop u.s. equities?

BOJ raise to .75% or higher and a stronger US dollar; though I dont know how the latter will come about :rolleyes:

[jk]

Re: what will drop u.s. equities?

BOJ raise to .75% or higher and a stronger US dollar; though I dont know how the latter will come about :rolleyes:

in the feb sell-off, the dollar strengthened against all the currencies except the yen, probably as a result of flow from other currencies back to the yen via the dollar. [i.e. selling euros to buy dollars, then selling dollars to buy yen]

[idianov]

Re: what will drop u.s. equities?

Does it look like China is getting ready to turn on the liquidity drain by issuing bonds to buy forex reserves? What would this money sink do to emerging markets?

China central banker proposes issuing bonds to buy forex reserves - report
04/25/07 02:48 am (GMT)
SHANGHAI (XFN-ASIA) - China's planned foreign exchange reserve investment agency should issue special treasury bonds to raise money from domestic investors and use the proceeds to buy foreign exchange reserves from the central bank to invest abroad, state media reported, citing a central bank official.

Xiang Junbo, deputy governor of the People's Bank of China, said in a speech at Fudan University that the bank will further expand investment channels for its foreign exchange reserves, the Oriental Morning Post reported.

The country's foreign exchange reserves are estimated to be worth 1.2 trln usd as of the end of March.

China should also increase gold reserves and strategic resources like oil and metals, the International Finance News cited Xiang as saying.

In addition, the central bank official said the government should invest some foreign exchange reserves abroad in low-risk bonds and some in state banks, policy banks or commercial banks to help expansion abroad.

http://www.forextelevision.com/FT/AF...jsp?seq=214046

[idianov]

Re: what will drop u.s. equities?

And the right answer is... liqiudity crisis caused by China.

IMO, the debt orgy party was crushed back in January, when China announced a 200 billion dollar bond offering priced in yuan to buy foreign reserves for investment. The deal actually happened in June according to Bloomberg reports I have seen at that time. Everybody was excited saying Chinese will start buying stocks and inflated assets throwing money everywhere. But, to the contrary, the buyers of debt paper have disappeared and the rest is history unfolding before our eyes.

Looking back at every stock market correction since 2002, there was never a time when the risk on junk bonds, lbo deals, commercial, and residential bonds have turned up sharply all at the same time before a correction. I am seeing an increasing possibility of a technical crash in stock market in front of us.

[jk]

Re: what will drop u.s. equities?

it's worth noting here that china's $3billion investment in blackstone is now worth $2.5billion. not that they can't afford it.

[rachits]

Re: what will drop u.s. equities?

heh, its going to be hard to figure out what will be the trigger before the fact.

Its often very hard to find out what was the trigger *after* the fact. Witness 1987, a lot of experts disagree what really caused the big drop in the equities market.

[c1ue]

Re: what will drop u.s. equities?

it's worth noting here that china's $3billion investment in blackstone is now worth $2.5billion. not that they can't afford it.

JK,

This is not necessarily a true statement. If China had bought into BX as an IPO (and didn't get pre-IPO pricing), this could be true.

However, BX consists of literally hundreds of sub-funds. China might have bought into these funds directly across the board, or they could have picked a subset.

The BX funds that I own are actually holding very steady - they've given up June/July gains but are only slight down from May.

[jk]

Re: what will drop u.s. equities?

JK,

This is not necessarily a true statement. If China had bought into BX as an IPO (and didn't get pre-IPO pricing), this could be true.

However, BX consists of literally hundreds of sub-funds. China might have bought into these funds directly across the board, or they could have picked a subset.

The BX funds that I own are actually holding very steady - they've given up June/July gains but are only slight down from May.

the chinese bought $3billion worth into blackstone, the private equity management firm, not their investment pools- or if they bought into the investment pools, that was NOT public information, and would have been in addition to their buying a peice of the management company. also, don't confuse blackstone, the private equity firm, with blackROCK, the [among other things] mutual fund manager.